Thursday, June 12, 2008

Toromont Industries Ltd

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional.

The stock I ended up buying to replace AGF Management was Toromont Industries Ltd (TSX-TIH). There are a few negatives on this stock, such as the price to book ratio at 2.8 is a little high. This ratio depends more on what other stocks in the same category are doing and on what you might want. Also, the Accrual Ratio, when the Financial Cash Flow is included is a bit high at 5.7%. Without the Financial Cash Flow, this ratio is a more neutral figure of 1.5%.

Now on to what I like. The Earnings Per Share (EPS) has an average increase of 24% each year over the last 5 years. The dividends have been increasing at an annual average of 25% over the last 5 years. The Graham Price and the closing price is not that far apart. This is a growth stock, so you expect a divergence of these prices. The closing price on this stock has been increasing at an annual average rate of 24% over the last 5 years. The Liquidity Ratio (assets/debt) is 1.93. The current Liquidity Ratio is 1.99. This means that they have debt under control.

Over the past year, this stock has done mostly better than the TSX index. It is considered an industrial, and it has done better than the capped Industrial Index. The P/E is at a reasonable 15.5%

I first bought this stock for my RRSP account in December 2007. According to Quicken, I have made an annual return of 13.2% so far on this stock. This stock is also on the S&P/TSX Dividend Aristocrat List and on Mergent’s Dividend Achievers List.

See my spreadsheet at See my website at

This company has two sections. The Equipment Group is for their Caterpillar dealerships. The Compression Group, designs, engineers, fabricates, installs and services natural gas compression units; and hydrocarbon and petrochemical process compression systems; and industrial and recreational refrigeration compression systems. They do business in Canada only.

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